Congress returns to Washington after the mid-term elections in early November to conduct a lame duck session, which will be focused on the issue of job — or more accurately, the lack thereof — and the need for further economic stimulus. That is the context in which the expiring George W. Bush tax cuts of 2001 and 2003 will be debated. That will be the marquee "jobs" issue, but not the only one.
Congress returns to Washington after the mid-term elections in early November to conduct a lame duck session, which will be focused on the issue of job — or more accurately, the lack thereof — and the need for further economic stimulus.
Chinese currency undervaluation and its impact on American jobs will also come up in the Senate. The Senate already has before it a bill passed by the House in late September which would allow the Commerce Department to put import duties on Chinese products which are underpriced — when compared to U.S. products — because of Chinese currency manipulation. The Currency Reform for Fair Trade Act (H.R. 2378) does not single out a single product category where imports have led to the loss of U.S. jobs. But the damage Chinese imports have caused to U.S. aftermarket auto parts manufacturers has been an issue in the past.
Chinese imports of cheap brake rotors led to the Commerce Department assessing anti-dumping duties in the mid-1990s, to cite one example. Among the U.S. companies who complained was one who, a decade later became the last U.S. manufacturer of brake rotors to give up the ghost and end domestic brake rotor manufacturing. It can't be said with any certainty that Chinese rotor imports were alone responsible for the death of this and other companies' manufacturing, much less that Chinese currency undervaluation helped Chinese importers. But the cheap Chinese imports probably had something to do with the demise.
Chinese aftermarket imports have been increasing in some key retailer segments. According to the 2010 Factbook published by the Automotive Aftermarket Industry Association, China imports in the chemicals and lubricants category experienced the largest growth rate (94.6 percent) over the past five years. Tires and wheels were up nearly 14 percent over that five-year period, and glass and mirrors were up 15 percent. In fact, President Obama in mid-September announced new tariffs on Chinese tire imports, starting at 35 percent in the first year, 30 percent in the second and 25 percent in the third. The U.S. Trade Representative cited domestic tire manufacturing plant closings associated with increased Chinese, low-price imports. Those duties were imposed because of a "surge" in Chinese imports.
The U.S. is allowed to impose tariffs associated with Chinese surges because of a special section of the trade laws, which applies only to China. There is no question that the U.S. Commerce Department can also impose either antidumping or countervailing duties on imports of products from any country after the U.S. International Trade Commission finds those products are "damaging" U.S. manufacturers. But it is not clear that damage resulting from a country's currency manipulation allows for tariffs.
The House bill clarifies that question and now the pressure shifts to the Senate. The House bill passed by a vote of 348-79. Both parties are unhappy with Chinese currency maneuvering. But it seems likely that the Senate may take a "cooler head" approach and modify the legislative language of H.R. 2378 so that the U.S. first hashes out the currency issue in the World Trade Organization, instead of acting unilaterally, which could start a trade war.
If the China currency issue gets nasty and provokes China, it could become a lose-lose situation for aftermarket retailers. On the one hand, if the bill passes and Commerce begins assessing import duties on Chinese aftermarket parts, the price of those parts will obviously increase. It is possible, also, that higher costs would encourage importers to stop bringing in Chinese products which account for high retail margins.
Congress returns to Washington after the mid-term elections in early November to conduct a lame duck session, which will be focused on the issue of job — or more accurately, the lack thereof — and the need for further economic stimulus. That is the context in which the expiring George W. Bush tax cuts of 2001 and 2003 will be debated. That will be the marquee "jobs" issue, but not the only one.
Congress returns to Washington after the mid-term elections in early November to conduct a lame duck session, which will be focused on the issue of job — or more accurately, the lack thereof — and the need for further economic stimulus.
Chinese currency undervaluation and its impact on American jobs will also come up in the Senate. The Senate already has before it a bill passed by the House in late September which would allow the Commerce Department to put import duties on Chinese products which are underpriced — when compared to U.S. products — because of Chinese currency manipulation. The Currency Reform for Fair Trade Act (H.R. 2378) does not single out a single product category where imports have led to the loss of U.S. jobs. But the damage Chinese imports have caused to U.S. aftermarket auto parts manufacturers has been an issue in the past.
Chinese imports of cheap brake rotors led to the Commerce Department assessing anti-dumping duties in the mid-1990s, to cite one example. Among the U.S. companies who complained was one who, a decade later became the last U.S. manufacturer of brake rotors to give up the ghost and end domestic brake rotor manufacturing. It can't be said with any certainty that Chinese rotor imports were alone responsible for the death of this and other companies' manufacturing, much less that Chinese currency undervaluation helped Chinese importers. But the cheap Chinese imports probably had something to do with the demise.
Chinese aftermarket imports have been increasing in some key retailer segments. According to the 2010 Factbook published by the Automotive Aftermarket Industry Association, China imports in the chemicals and lubricants category experienced the largest growth rate (94.6 percent) over the past five years. Tires and wheels were up nearly 14 percent over that five-year period, and glass and mirrors were up 15 percent. In fact, President Obama in mid-September announced new tariffs on Chinese tire imports, starting at 35 percent in the first year, 30 percent in the second and 25 percent in the third. The U.S. Trade Representative cited domestic tire manufacturing plant closings associated with increased Chinese, low-price imports. Those duties were imposed because of a "surge" in Chinese imports.
The U.S. is allowed to impose tariffs associated with Chinese surges because of a special section of the trade laws, which applies only to China. There is no question that the U.S. Commerce Department can also impose either antidumping or countervailing duties on imports of products from any country after the U.S. International Trade Commission finds those products are "damaging" U.S. manufacturers. But it is not clear that damage resulting from a country's currency manipulation allows for tariffs.
The House bill clarifies that question and now the pressure shifts to the Senate. The House bill passed by a vote of 348-79. Both parties are unhappy with Chinese currency maneuvering. But it seems likely that the Senate may take a "cooler head" approach and modify the legislative language of H.R. 2378 so that the U.S. first hashes out the currency issue in the World Trade Organization, instead of acting unilaterally, which could start a trade war.
If the China currency issue gets nasty and provokes China, it could become a lose-lose situation for aftermarket retailers. On the one hand, if the bill passes and Commerce begins assessing import duties on Chinese aftermarket parts, the price of those parts will obviously increase. It is possible, also, that higher costs would encourage importers to stop bringing in Chinese products which account for high retail margins.
